Happy Friday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

• 🟩 | US Stocks Rose on Friday. The three major indexes made marginal gains today as Wall Street wraps up its best week of the year and recession fears fade.

• 📈 | One Notable Gainer: Bayer’s stock soared 9% after announcing a legal victory over claims that exposure to its weed-killing product Roundup led to cancer.

• 📉 | One Notable Decliner: Packaging company Amcor saw its shares fall 4% after reporting that sales declined more than expected in Q2.

• 🏘️ | Tomorrow's Trade: Picking up the Homebuilding Slack. Scroll down for more.

Plus, AI-focused companies have the potential to deliver early investors amazing returns. Click here now to check out the latest news...

MARKET MOVERS

H&R Block, Coherent, & Chipotle

JD (+8%) JD.com, a Beijing e-commerce company, reported a beat on quarterly profits, helped by price cuts that lured in cost-conscious consumers (Reuters)

HRB (+12%) Tax-prep firm H&R Block reported better-than-forecasted Q4 results and announced a 17% increase to its quarterly dividend (YF)

COHR (+7%) Electronic manufacturing company Coherent reported Q4 earnings and revenue that topped estimates (YF)

AMAT (-2%) Shares of Applied Materials fell despite forecasting fourth-quarter revenue slightly above Wall Street estimates (Reuters)

CMG (-3%) Chipotle’s shares continue to fall following news that its CEO Brian Niccol is leaving to fill the same role at Starbucks (CNBC)

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OVERHEARD ON THE STREET

Bloomberg: Federal Chair Jerome Powell will speak next Friday at the Jackson Hole Economic Policy Symposium, the US central bank said Thursday.

Reuters: Ford is recalling 85,000 Explorer SUVs equipped with the Police Interceptor Utility package due to concerns about engine fires.

CNBC: TS Lombard's chief US economist said, “No recession today, but one will become increasingly inevitable by year-end if the Fed fails to act."

NYT: The federal government awarded $1.6 billion to Texas Instruments to build semiconductor plants with funding stemming from the bipartisan CHIPS act.

Investing.com: UBS analysts expect the GLP-1 market to reach $150 billion by 2029, reflecting a 33% compound annual growth rate from 2023 to 2029.

TOMORROW’S TRADE IDEA, TODAY

Picking up the Homebuilding Slack

Housing Market Comeback

The housing market has been in shambles since the pandemic, largely due to decreased demand thanks to sky-high interest rates. However, supply is starting to improve and the Fed looks set to finally cut rates, and the market could be primed for a bounceback.

Homebuilder D.R. Horton (DHI) is starting to look like an attractive investment. Shares have returned around 25% annually over the past decade. Its management has been successful in managing costs and improving inventory, which should drive continued upward movement.

Supply and Demand

The US population is up around 9% since 2009, but only 17 million homes have been built since then. That’s 20% less than the 14 years before 2009. According to Stephanie Link of Hightower Advisors, this puts the country behind demand by around 5 million homes.

That’s great news for D.R. Horton, which has constructed around a million homes across 33 states since its founding. It ended Q2 with just about 43,000 houses in its inventory, and around 40% of those homes are sold. At the end of June, the company owned 630,000 plots to build on.

Margin Strength

One of Horton’s biggest strengths is its ability to manage costs. The cost of materials is up around 40% since before the pandemic, plus there’s a labor shortage. Despite those challenges, it managed to generate a 24% margin on home sales in Q2, up from previous years. Prices are starting to drop, and analysts believe its margin could reach 25% in Q4.

The stock is up 17% YTD and 21% over the past 6 months, yet it’s still trading at a reasonable 10.6 times 2025 EPS. That’s around half of the S&P 500 average. Wall Street’s consensus is that the stock could hit $200 per share by the end of 2025. The homebuilding company also pays a dividend and has a stock buyback program.

Horton has performed well during a tough market, and all signs point to its success in a resurging market.

TOGETHER WITH THE INVESTMENT JOURNAL

“Next Big AI Investment Found.”

AI-focused companies have the potential to deliver early investors amazing returns. Click here now to check out the latest news...

ON OUR RADAR

Axios: In a speech in North Carolina, Kamala Harris proposed a raft of progressive economic proposals, including a $6,000 tax credit for new parents.

The Hill: More policy updates… Harris will call for constructing 3 million new housing units and provide first-time buyers $25K in downpayment support.

QZ: Walmart is cutting prices on thousands of items as inflation eases, a sign that consumers are still hunting for bargains.

MW: About 36% of buyers indicate that a recession would make them somewhat more likely to purchase a home.

CNN: According to Oxfam International, the top 1% has seen its wealth soar by $42 trillion over the past decade.

YESTERDAY’S POLL RESULTS

Which stock do you think will outperform over the next 12 months?

🟨🟨🟨🟨⬜️⬜️ Google (GOOG)

🟩🟩🟩🟩🟩🟩 Apple (AAPL)